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Exporting with Uncle Sam: your tax dollars at work.


Utah business executives, not unlike those in the rest of the country, have traditionally viewed Washington, D.C., as more of a hindrance than anything else when implementing their business strategies. There are the horror stories about the $300 hammers and the purported regulations requiring farmers to provide farm workers with large numbers of toilets for every so many acres of land under cultivation. Washington, however, can be a valuable resource for business - especially businesses wanting to expand into international markets. The government spends more than $25 billion annually and employs more than 75,000 people to help U.S. firms compete internationally. It provides services as routine as background studies on foreign markets and as critical as subsidized financing to meet overseas competitors. Like it or not, taxpayers are footing this bill. So Utahns might as well get some return on all of those federal tax dollars by utilizing Uncle Sam's international business services.

American business executives generally have an aversion to using any government programs, and when a company goes to the government for assistance, the business community often sees the gesture as a sign of weakness. These attitudes can be summed up by the experience of a local attorney whose client was doing business with some Russians in Utah. The Russian partners insisted upon involving the state government to move the enterprise forward, much to the chagrin of the Utah executive. Frustrated, the Utah executive fumed, "Look, we only court government officials to keep them out of our hair!"

Given this bias, the concept of leveraging on government resources for international business is often more foreign to U.S. executives than to the global markets in which they are trying to compete. By comparison, few foreign business executives would think of expanding overseas without first approaching their governments for assistance.

Uncle Sam's Export Supermarket

Another obstacle to using government programs for international expansion is that the U.S. business community - both large companies and small - is not aware of the programs our government offers. Not surprisingly, a recent Gallup poll showed that less than half of the U.S. executives surveyed were aware of the international services offered by the Department of Commerce. And other government agencies offering international support had an awareness level of less than 15 percent. Research has also shown that most U.S. executives believe that Japanese and European government agencies are better at helping their competitors than the U.S. government is in helping them. The reality, however, is that no other government in the world offers the diversity and the amount of international business support as does the U.S. government.

Unfortunately, it is difficult finding out what is available. Services are spread out over an alphabet soup of agencies such as EXIM, OPIC, DOC, DOA, DOD, CCC, TDP, AID, SBA, and FCIA, which makes it difficult even for government officials to navigate through the maze. With this confusion, searching for the right government program to help your business is much like shopping would be in a supermarket that sells merchandise arranged by manufacturer instead of by product. Hence, without knowing who the other manufacturer is and what it offers, the Saturday trip to this hypothetical supermarket is a nightmare - which all too frequently is what U.S. businesses encounter when shopping in Uncle Sam's supermarket for international business assistance.

Finally, most U.S. executives avoid the use of government programs because they believe these programs are inaccessible. There is a perception that government assitance requires endless paperwork and takes forever to obtain. For a small business with limited resources, the threat of huge amounts of paperwork and long processing times leads most to believe that whatever assistance exists insn't worth the effort. For the most part, the complaint about too much paperwork has no basis in reality for the government's international services. Take the example of Eximbank, the government's primary source of export financing: its longest loan application is only two pages. The federal bureacracy's processing time is less that ideal, but most of the frustration that arises is due to companies waiting until the last minute to submit applications.

Billions of Dollars: Ready and Waiting

Regardless of the reasons, most of these government programs are underutilized, and billions of dollars go unclaimed each year. According to Delphos International, a Washington, D.C., consulting frim that helps clients obtain government money from multilateral lending organizations and from U.S. and foreign governments, the biggest difficulty in getting companies to use the government's international services is convincing them that the programs are valuable. Once companies do use its services, they are mostly satisfied with the results. Hopefully, a glimpse of some of the products in Uncle Sam's supermarket will persuade even the most reticent Utah international business executive to give the government a chance. See the sidebar for information on government assistance.

In addition to Uncle Sam's supermarket, several services and financial assistance programs are offered by multilateral organizations (the World Bank, U.N., Inter-American Development Bank, for example) and foreign governments. As a way of smoothing over trade friction, Japan and Taiwan offer financing assistance to U.S. companies to help them export products to their countries. The Japanese government even has programs to help finance the capital expansion of facilities here in the United States when a substantial amount of the product is going to Japan.

One of the public resource should not be overlooked: your state government. California and Texas are particularly active and have gone so far as to set up mini Eximbanks to assist in the financing of their exporters. While Utah has not gone quite that far, the state's government is actively involved in providing valuable information and services for Utah business executives. The state also maintains overseas business development offices in Brussels, Tokyo, Seoul, and Taipei.

Utah businesses are learning firsthand the benefits of tapping into the government's treasure chest. Digitran, a Logan manufacturer of training simulators, has used Eximbank to finance its growing international sales. Pura, a Provo manufacturer of ultraviolet water-treatment equipment, advertised in the Department of Commerce's Commercial News USA. From each advertisement it placed, the company received over 500 inquiries, which resulted in more than 50 different relationship with foreign distributors. Today, more than 40 percent of its products are sold overseas. Great Basin Trucks, a Salt Lake heavy-truck dealership, has targeted international business as an important source of growth. By using the government to finance its buyers, the firm is selling trucks overseas. These businesses have come to recognize the importance of making Uncle Sam a strategic partner when competing overseas.

Of course, the government is not the solution to all international business problems, and it never was intended to be so. But by refusing to work with Uncle Sam, U.S. businesses limit their ability to compete globally, which in the long run results in lost opportunities, eroding market share, and declining economic power fo us all.

A former Utahn, Alan J. Beard is vice president of Delphos International, a Washington, D.C., firm specializing in obtaining government money for international business.
COPYRIGHT 1991 Olympus Publishing Co.
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:government help for business; contains related article on business information and aid services
Author:Beard, Alan J.
Publication:Utah Business
Date:Sep 1, 1991
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